I think I understand it. Spotlight is able to find
file created by other users but were stored outside
of their /Users/<username> folders right?
Actually, is has nothing to do with being in /Users/<username>.
By default, apple creates Desktop, Documents, Library, Movies, Pictures in the user's home directory, and sets the permissions to 700 (no access to other users).
Apple also creates two other files, Public and Sites, which it defaults the permissions to 755 (read only to other users).
When a user creates additional folders in his home directory, the folders default to 755 (other users can read these folders). Hence, so can (and does) Spotlight. (note, if you want to prevent users from seeing these, CMD-I)
I took Mike N.'s advice, and only use spotlight from Finder. It allow me to specify where I want to search. (Great advice Mike N. Thanks)